THE YOUNG ICCA ARBITRATION BLOG IS A VIRTUAL SPACE FOR YOUNG PRACTITIONERS AND STUDENTS TO PUBLISH ARTICLES, COMMENT ON EACH OTHER'S ARTICLES, SHARE KNOWLEDGE AND EXPERIENCES AND INTERACT WITH THEIR PEERS.

Subscribe to Blog via Email

Enter your email address to subscribe to this blog and receive notifications of new posts by email.

Email Address

Young ICCA is a world-wide arbitration knowledge network for young practitioners and students, established in 2010. It aims to promote the use of arbitration by exposing new practitioners from all corners of the globe to the international practice of arbitration.

The Brazilian Superior Court of Justice (hereafter “STJ”) has recently delivered an important judgment regarding the enforceability of contracts containing arbitration clauses.

Under Brazilian Law (Civil Procedure Code, article 585, II), contracts and other private documents establishing the duty of a party to pay a precise amount of money at a pre-established date, if signed by two witnesses, might be enforced before the Courts regardless of a prior judgment. In the aforementioned judgment, the STJ held that such a rule is to be applied even if the agreement being enforced contains a dispute resolution clause under which the parties must settle any dispute through arbitration.

The case

EMITAQ MINERAÇÃO E CONSTRUÇÃO LTDA. took enforcement action against COMPANHIA VALE DO RIO DOCE, demanding the payment of US$ 502,022.68, due forty-five days after the agreement’s execution.

The enforcement action was dismissed at first and second instance on the grounds that the controversy should have been submitted to arbitration. The appellant then took the case to the STJ (appeal REsp 1373710 / MG), claiming there was no reason to submit the case to arbitration since the contract established a liquid, certain and enforceable obligation to pay. Furthermore, the appellant alleged that only clauses subject to doubt demanded settlement by arbitration.

The judgment

According to the conclusion ratified by the superior court Justices sitting as STJ’s third panel[1], even though as a general rule the arbitration clause excludes state jurisdiction, this is not the case when the contract contains a liquid, certain and enforceable obligation to pay a given amount, since there is no need to pursue an arbitral award that would eventually reach the same conclusion. The court further stated that the arbitration clause does not preclude the enforceability of the contract under Brazilian procedural law and that the arbitration clause may coexist with the enforceable nature of the contract.

Comment

This was the second time the STJ addressed the matter, having reached the same conclusion on both occasions (the first being at the judgement of the appeal REsp 944.917⁄SP, on September 9th, 2008[2]). The result sheds more light on the approach followed by the STJ on the interpretation of arbitral clauses which are seemingly in conflict with other general rules of court procedure regarding the enforceability of contracts and other private documents and also highlights the importance not only of dispute resolution clause drafting but also on the wording of other obligations defined under the contract.

Therefore, not only the arbitration clause must be clear about the intent of the parties to submit any controversy or claim to final and binding arbitration but also any obligation to pay under the contract must clearly provide all requirements that must be fulfilled for such obligation to be enforceable.